Sales for Startups: The New Demand Generation

You may often hear of the term “demand generation” from marketers when talking about lead acquisition strategies. The term evolved as the nature of marketing changed over the decades, and the role of the marketer became more metrics-oriented. Now, marketing has a direct responsibility for driving leads and quantifying those efforts in order to justify their existence and their marketing spend.

The marketing industry was built upon the concept of brand and awareness. It was fine just to apply glossy materials and advertising to push the product*. Events and shows would juice the interest, and soon enough the sales would come. That was how marketing and sales operated; marketing got the word out, sales closed deals and they both operated in their separate worlds without much interaction or involvement.

So what does this have to do with demand generation, and what exactly is it? Simply put, it is the practice of creating awareness for a product or service. It is often distinct from lead generation, which is the practice of collecting and managing leads once a contact has engaged/responded to some marketing message. Thus, sometimes people consider demand generation to be outbound outreach versus lead generation, which is inbound.

Unfortunately, that prevailing view is completely and utterly wrong. All it has managed to do is separate marketing and sales even further by putting some “leads team” in the middle and obscuring ownership of the process and goals. The other reason this definition is problematic is that awareness is now more than ever tied into the leads process and even into direct customer engagement. For that, you can thank the Internet.

It was easy to understand why awareness was its own silo for so long prior to the Internet. The main options (or channels) available were print ads, commercials, events and direct mail. Yet the means to directly track the marketing channel involved a leap from awareness (when prospect was first aware to offering) to action (when there was a response to awareness). Sometimes that could be via 1-800 numbers or event codes or surveys, but often that key marketing effectiveness metric between awareness and action slipped through the cracks. Measuring marketing ROI (return on investment) with any accuracy was thus more intuition than data.

The Internet gets us much closer to filling in the data gaps. You can get a pretty accurate read on who is visiting your website, who is opening your emails and who is downloading your apps. Every click and swipe and hesitation can be tracked, analyzed, A/B tested and retested with different variants. But more importantly, every action can be tracked to lead source and lead acquisition strategy while every outbound and inbound lead interaction eventually can be tied to a direct sale and collected revenue. What we have here folks is the marketing Holy Grail and the last link needed to tie marketing metrics to sales metrics to revenue generation.

What does this mean? It means we should stop acting as if awareness is something wholly different and uniquely divorced from maintaining a metrics-oriented approach to running a business. There is no “throwing stuff over the wall,” as it used to be the case between marketing and sales, but more of an integrated approach where both are actively involved in campaign design and execution. There is no need to simply “take a flyer” on some marketing event or program on the hope that it could generate leads and eventually sales. Every activity and program that drives awareness needs to tie back to implementation cost and revenue generation and lead quality.

Does that mean that every thing will pan out or that every program will have precise data to draw from? No, some things will still be hard to track, for example, if you sponsor events, create promotional materials or take out print advertising. Those things may still have merit (who doesn’t need another tech t-shirt), but it becomes less and less compelling as more and more marketing migrates to the Internet. For cost conscious startups striving toward revenue positive, this is even more the case, as the Internet still provides the lowest-cost marketing channel and most direct means of outreach.

It is time to retire the old idea of demand generation when it comes to startups. Branding is certainly important. Getting one’s name out there is important. But the world has changed. It is not about the aloofness of awareness marketing, but rather implementing a growth oriented strategy that uses metrics to drive toward greater revenue attainment. Thus campaigns and programs should show a direct, quantifiable connection to growing customer numbers and growing sales. The next post or two will dive into the actual lead execution mechanics so that we can start to see where marketing and sales meet and what the new demand generation is all about.

* A notable exception is the direct marketing industry, which is heavily metrics-driven and gained popularity in the ‘60s, influenced by the work of Lester Wunderman.

Mark is an early stage technology investor and entrepreneur based in NYC. Through Birch Ventures, he works with a portfolio of early stage B2B SaaS technology startups providing both capital and guidance in the areas of marketing, sales, strategic planning and funding.

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